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North Dakota State Gaming Director Deb McDaniel testifies before a legislative committee at the state Capitol Tuesday, Sept. 24, 2019. John Hageman / Forum News Service

North Dakota expected to hit $1 billion in charitable gaming wagers in 2019-21 due to electronic pull tabs

BISMARCK — North Dakota's top charitable gaming regulator asked state lawmakers for more staff Tuesday, Sept. 24, as she predicted gamblers will wager $1 billion during the current two-year budget cycle due to a proliferation of new electronic pull tab machines.

State Gaming Director Deb McDaniel said the implementation of electronic pull tab devices roughly a year ago and recent budget cuts have strained her office, which has almost a dozen full-time positions. She would need "at least" twice as many staffers to regulate gambling operations property, she said.

State lawmakers approved electronic pull tabs during the 2017 session. Charitable gaming officials have described the cabinet-style devices as an electronic version of the paper pull tabs, which players rip open to reveal a winning combination of symbols, though others have compared the new offering to slot machines.

As of Aug. 31, there were nearly 2,000 electronic pull tab machines in 524 sites conducted by 183 charitable gaming organizations, McDaniel said. They're in 210 cities and all but five counties in the state.

The machines' introduction coincided with a boost in overall wagers, according to McDaniel. Gross proceeds grew from more than $569 million in 2015-17 to an estimated $841 million in 2017-19, which ended in June.

McDaniel, whose agency is part of the attorney general's office, said she's heard the machines are taking away business from tribal casinos and is attracting money launderers putting ill-gotten dollars into the devices.

Janelle Mitzel, president of the Charitable Gaming Association of North Dakota, said the while charities have seen strong increases in proceeds used for their missions, their tax bills have also increased. She highlighted what she called a tax structure "flaw" that effectively triples the rate charities pay for revenue from electronic pull tabs.

"While that may be providing a small windfall to the state, it is robbing charitable organizations of revenue that would be put to better use in our local communities supporting these organizations and their missions," Mitzel said in prepared remarks.

Still, Mitzel encouraged lawmakers to "adequately" fund state gambling regulators and to set aside gaming tax revenue for addiction prevention and treatment.

The interim Taxation Committee met at the state Capitol to examine charitable gaming taxes ahead of the 2021 session. Outgoing Senate Finance and Taxation Committee Chairman Dwight Cook, R-Mandan, asked McDaniel to put together budget information for the study committee.

"Whatever the tax is, it ought to cover your expenses for regulating and enforcement," he said.

John Hageman

John Hageman covers North Dakota politics from the Forum News Service bureau in Bismarck. He attended the University of Minnesota in the Twin Cities, where he studied journalism and political science, and he previously worked at the Grand Forks Herald and Bemidji Pioneer.  

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